approach used on cable-channel HGTV’s “Property
Brothers” show, where state-of-the-art digital-imaging
software is used to show potential homebuyers what
properties will look like after being remodeled.

There also are properties listed as “can’t be financed.”
Sometimes, that’s because the properties are viewed
as tear-downs. In this category, they are marketed to
a small pool of cash buyers, usually for rock-bottom
prices. Depending on the circumstances, however, a
renovation loan might be all that’s needed to bring a
property back up to code and make it more attractive
to a broader pool of homebuyers, and perhaps make it
possible to sell the home for a higher price.

In contemplating a move into the renovation-loan
niche, it’s worth noting what Warren Buffett’s longtime partner, Charlie Munger, said, “I find it quite useful to think of a free-market economy — or partly free
market economy — as sort of the equivalent of an ecosystem. Just as animals flourish in niches, people who
specialize in some narrow niche can do very well.” ■

A VA renovation loan, for example, allows qualified
borrowers to purchase a home with no downpayment
and the ability to finance remodeling, renovations and
repairs. The financing can be provided through a one-step process that allows the borrower to roll the rehab
loan in with the purchase mortgage — allowing for
one interest rate and monthly payment.

This innovative program gives VA borrowers the
flexibility of buying less-expensive homes that may
need work and being able to finance the purchase and
upgrades through one affordable financing path.

The HGTV approach

Another new approach to Realtors would be to come
at it from a property perspective. Every Realtor has
“tired” listings that stay on the Multiple Listing Service
(MLS) for months, when more attractive homes are
selling within days. What if you researched the properties that have been on the market for 60 to 90 days?

Generally, if homes haven’t sold in this market, it
means there’s a challenge there, right? Because every
good property that’s priced well, most likely, is moving pretty well in a low-inventory market. So, if that is
the case, why not make an appointment, go see that
Realtor, and present renovation-financing options to
address the home listings that are having a hard time
attracting buyers.

You might even encourage the Realtor to consultwith a designer or a construction contractor. In somecases, it might be worthwhile to create a storyboardand display samples of tiles, fabrics, etc., at the prop-erty. Yes, it takes work and effort, and might add somecost, but at the end of the day, it isn’t all that differentfrom “staging” a home. It also gives the Realtor newoptions, instead of just coming down in price.

Now the real estate agent can say something like
this to the client: “Hey, you know what? Here’s the
way the kitchen exists today, but using this loan product, you would have access to X number of dollars.

Here’s a sketch of what the kitchen could look like,and here are the materials that you could use for aproperty upgrade.”Some people can look at properties and see thepotential immediately. Others can’t see it until it’s laidout in front of them. So, this approach would helphomebuyer prospects who need a tangible lookand feel.

Now they can look at the quartz sample for new
countertops, and the nice gray color next to it, and
think, “Wow this would look really nice, and we’d have
a brand new kitchen basically.” It’s similar to the

<< Renovation continued from Page 76 “A renovation loan might be all that’sneeded to bring a property back upto code and make it more attractiveto a broader pool of homebuyers.”